In a modest but notable shift, the Asian Development Bank (ADB) has revised Pakistan’s economic growth forecast for the fiscal year 2025 to 2.7%, up from its earlier projection of 2.5% made in April.
According to The News, the update came in the ADB’s Asian Development Outlook released Wednesday, where the Manila-based institution pointed to stronger-than-expected growth in Pakistan’s industrial and services sectors as the key reason for the upgrade.
“The revised forecast reflects a higher-than-expected uptick in the industry and services sector, even as the expected declines in agricultural output come to pass,” the report stated.
Despite the slight improvement for FY25, the ADB kept its growth outlook for fiscal year 2026 unchanged at 3%.
The report also brought a bit of relief on the inflation front. The ADB revised its FY25 inflation forecast downward, citing a faster-than-anticipated drop in both food and non-food prices during the first 11 months of the current fiscal year.
However, the inflation outlook for FY26 remains steady, with no changes from previous estimates.
While Pakistan’s numbers showed a marginal improvement, the regional picture painted by the ADB was less optimistic.
The Bank lowered its growth forecast for South Asia as a whole, projecting regional GDP to rise by 5.9% in 2025 slightly below the earlier estimate of 6%. The downward revision is attributed to ongoing policy uncertainty and trade disruptions, particularly those triggered by increased US tariffs.
The ADB warned that risks to the broader economic outlook in Asia and the Pacific are still leaning toward the downside. It noted that any further escalation of US trade restrictions could weigh heavily on the region’s economies.
In addition, geopolitical tensions and global supply chain issues could lead to rising energy prices, further straining recovery.
“Asia and the Pacific has weathered an increasingly challenging external environment this year. But the economic outlook has weakened amid intensifying risks and global uncertainty,” said ADB Chief Economist Albert Park.
He emphasized the importance of strengthening economic fundamentals, promoting open trade, and deepening regional cooperation to support long-term investment, job creation, and economic stability.
The update offers a mixed outlook for Pakistan hopeful signs of industrial and service sector recovery on one hand, and persistent external risks on the other, underscoring the need for careful economic management in the months ahead.
